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these are the options to fill in the table Cinder Inc. is a Canadian-controlled private corporation based in your province. The company operates a wholesale
these are the options to fill in the table
Cinder Inc. is a Canadian-controlled private corporation based in your province. The company operates a wholesale business. The following information is provided for its year ended May 31, 2020: 1. Net income for tax purposes is $212,000. Included in this amount is the following: Interest income from bonds Interest income on overdue trade accounts receivable Taxable capital gain on sale of land Eligible dividends from Canadian public corporations Non-eligible dividends from PQ Ltd. (see item 2 below) $10,000 1,000 14,000 12,000 6,000 2. PQ Ltd. is a Canadian-controlled private corporation. Cinder owns 60% of its common voting shares. In 2020, PQ claimed the small business deduction on $320,000 of its active business income. PQ paid a non-eligible dividend of $10,000, of which Cinder's share is $6,000 (60%). As a result of the dividend, PQ received a dividend refund of $1,000 from its non-eligible RDTOH. 3. Cinder made contributions of $4,000 to registered charities. This amount has been correctly adjusted for in computing net income for tax purposes. 4. The following information is from the 2019 Tax return of Cinder: Non-capital losses Non-eligible refundable dividend tax on hand Eligible refundable dividend tax on hand Dividend refund Taxable capital Adjusted aggregate investment income $ 5,000 2,000 0 0 Under$ 10 million $30,000 5. On May 31, 2020, Cinder paid taxable dividends of $20,000 (eligible $10,000 and non-eligible $10,000) to its shareholders. Required: Determine Cinder's federal income tax for the 2020 taxation year. (use 0.3067 when multiplying to represent 30%3%. and 0.3833 when multiplying to represent 38 1/3%. Do not multiply by more than 4 decimal places and round your final answer to the nearest dollar. Enter subtractions as negative amounts.) Net income for tax purposes Taxable income Active business income Less: Less: Less: Active business income Aggregate investment income Part 1 tax Small business deduction - 19% x least of (0) (ii) Refundable tax on investment income 10 2/3% times the least of: General tax reduction - 13% of Less: Less: PARTI TAX Part IV Tax 38 1/3% x % x Non-eligible RDTOH Less: Add: Add: (0) (ii) (iii) Eligible RDTOH Add: Dividend Refund (i) Lessor of: (a) 38 1/3 % (b) Plus (ii) Lessor of: (a) (b) Federal income tax payable Aggregate investment income Balance at end of previous year Basic federal tax - 38% of taxable income - Business limit Dividend refund Eligible dividend Eligible dividends from public companies Eligible dividends paid Eligible RDTOH balance Income subject to SBD Interest income from bonds Interest income on overdue trade accounts receivable Net income for tax purposes Non-capital losses Non-eligible dividend Non-eligible dividends from PQ Ltd Non-eligible RDTOH balance Part I tax Part I tax payable Part IV tax on eligible dividendsStep by Step Solution
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